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Justices to Review Drug Reps’ Overtime Claims

(CN) - The Supreme Court on Monday said it would intervene in a lawsuit seeking overtime pay for pharmaceutical representatives, choosing an Arizona case amid a circuit split.

The case selected Monday involves a Feb. 14 decision from the 9th Circuit, which held that GlaxoSmithKline properly classified its sales representatives as "outside salesmen" ineligible for overtime.

About one week after the 9th Circuit decided this case, the Supreme Court refused to review a pair of 2nd Circuit rulings that found federal overtime laws cover Novartis and Schering sales reps.

Meanwhile other federal courts in the 3rd Circuit have applied the so-called "administrative exemption" to sales reps in overtime cases against Abbot Laboratories, Johnson & Johnson, AstraZeneca and Alpharm.

Under the federal Fair Labor Standards Act, workers who qualify as outside salesmen are exempt from requiring overtime pay.

The 9th Circuit had applied the "outside salesman" exemption after finding that the workers follow a commission-based model that has existed for 70-plus years.

"PSRs [pharmaceutical sales representatives] are by their own ambition and rewarded with commissions when their efforts generate new sales," the decision states. "They receive their commissions in lieu of overtime and enjoy a largely autonomous work-life outside of an office. The pharmaceutical industry's representatives - detail men and women - share many more similarities than differences with their colleagues in other sales fields, and we hold that they are exempt from the FLSA overtime-pay requirement."

As is its practice, the Supreme Court did not comment on its decision to take up the case.

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